CUMMINS INC. (NYSE:CMI) Files An 8-K Entry into a Material Definitive Agreement

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CUMMINS INC. (NYSE:CMI) Files An 8-K Entry into a Material Definitive Agreement

CUMMINS INC. (NYSE:CMI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

On August22, 2018, Cummins Inc. (the “Company”) entered into a credit agreement (the “New 5-Year Credit Agreement”) by and among the Company, certain of its subsidiaries (together with the Company, the “Borrowers”) and the lenders named therein (the “5-Year Lenders”). Under the New 5-Year Credit Agreement, which will mature on August22, 2023 (the “Maturity Date”), the Borrowers may obtain revolving and swingline loans and letters of credit, in each case subject to certain amount limitations, in an amount up to $2.0 billion in the aggregate outstanding at any time prior to the Maturity Date. The New 5-Year Credit Agreement replaces the Prior 5-Year Credit Agreement (as defined below).

On August22, 2018, the Company also entered into a 364-day credit agreement (the “New 364-Day Credit Agreement,” together with the New 5-Year Credit Agreement, the “Credit Agreements”) by and among the Company, the other Borrowers party thereto and the lenders named therein (the “364-Day Lenders,” together with the 5-Year Lenders, the “Lenders”). Under the New 364-Day Credit Agreement, the Borrowers may obtain revolving and swingline loans, in each case subject to certain amount limitations, in an amount up to $1.5 billion in the aggregate outstanding at any time prior to August21, 2019 (the “Commitment Termination Date”). The New 364-Day Credit Agreement replaces the Prior 364-Day Credit Agreement (as defined below).

The borrowings under the Credit Agreements will not be secured with liens on any of the Company’s or its subsidiaries’ assets. The Company will guarantee all borrowings by the subsidiary Borrowers under the Credit Agreements.

The Company may from time to time (a)prior to the Commitment Termination Date, increase the maximum availability under the New 364-Day Credit Agreement by up to $500 million and (b)prior to the Maturity Date, increase the maximum availability under the New 5-Year Credit Agreement by up to $1.0 billion, in each case if certain conditions are satisfied, including (i)the absence of any default or event of default under the applicable Credit Agreement, and (ii)the Company obtaining the consent of the Lenders participating in each such increase. In addition, prior to the Commitment Termination Date, the Company may, by notice to the administrative agent and subject to certain other conditions set forth in the New 364-Day Credit Agreement including the absence of any default or event of default thereunder, elect to convert all or a ratable portion of the outstanding revolving loans under the New 364-Day Credit Agreement into term loans (the “Term-Out Option”) that will mature on the first anniversary of the Commitment Termination Date. The Borrowers will pay a fee to the 364-Day Lenders equal to 0.5% of the aggregate principal amount of the outstanding revolving loans converted into term loans to the Term-Out Option.

Borrowings under the Credit Agreements will bear interest at varying rates, depending on the type of loan and, in some cases, the rates of designated benchmarks and the Borrower’s election. For all borrowings under the Credit Agreements, Borrowers may choose among the following interest rates: (i)solely in the case of U.S. dollar-denominated loans, an interest rate equal to the highest of (1)the prime rate in effect from time to time, (2)the greater of (A)the federal funds effective rate in effect from time to time and (B)the overnight bank funding rate in effect from time to time, in each case plus 0.5% and (3)the Adjusted LIBO Rate for a one month interest period plus 1.00%; (ii)an interest rate equal to the Adjusted LIBO Rate for the applicable interest period plus a rate ranging from 0.50% to 1.00%, depending on the credit rating of the Company’s senior unsecured long-term debt; or (iii)solely in the case of swingline loans, another rate agreed to by the applicable Lender and the applicable Borrower. The Adjusted LIBO Rate is a rate determined by reference to the rate payable on deposits in the relevant currency in the London interbank market. Currently, the Company’s senior unsecured long-term debt is rated A2 by Moody’s Investors Service,Inc. and A+ by Standard& Poor’s Financial Services LLC, which would result in a rate of the Adjusted LIBO Rate plus 0.75% under (ii)above.Credit ratings are not recommendations to buy and are subject to change, and each rating should be evaluated independently of any other rating. In addition,

the Company undertakes no obligation to update disclosures concerning its credit ratings, whether as a result of new information, future events or otherwise.

The Credit Agreements contain customary events of default and financial and other covenants, including a financial covenant requiring that the ratio of the total debt of the Company and its subsidiaries to the consolidated total capital of the Company and its subsidiaries as of the last day of each fiscal quarter not be greater than 0.65:1.

There are no material relationships between the Company or its affiliates and any of the Lenders, other than in connection with the Credit Agreements. The description of each Credit Agreement set forth above is qualified by reference to the New 364-Day Credit Agreement and the New 5-Year Credit Agreement, as applicable, filed herewith as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.

Item 1.02. Termination of a Material Definitive Agreement.

On August22, 2018, the Amended and Restated Credit Agreement, dated as of November13, 2015, by and among the Company, certain subsidiaries referred to therein and the lenders party thereto (the “Prior 5-Year Credit Agreement”), was replaced by the New 5-Year Credit Agreement. Under the Prior 5-Year Credit Agreement, which would have matured on November13, 2020, the borrowers and lenders were able to enter into revolving and swingline loans and issuances of letters of credit, in each case subject to certain amount limitations, in an amount up to $1.75 billion in the aggregate outstanding at any time prior to maturity.

In addition, on August22, 2018, the 364-Day Credit Agreement, dated as of September5, 2017, by and among the Company, certain subsidiaries referred to therein and the lenders party thereto (the “Prior 364-Day Credit Agreement”) was replaced by the New 364-Day Credit Agreement. Under the Prior 364-Day Credit Agreement, under which the commitments would have terminated on September4, 2018, the borrowers and lenders were able to enter into revolving and swingline loans, in each case subject to certain amount limitations, in an amount up to $1.0 billion in the aggregate outstanding at any time prior to maturity.

The borrowings under both the Prior 5-Year Credit Agreement and the Prior 364-Day Credit Agreement were not secured with liens on any of the Company’s or its subsidiaries’ assets and contained customary events of default and financial and other covenants. On August22, 2018, there were no loans outstanding under either the Prior 5-Year Credit Agreement or the Prior 364-Day Credit Agreement.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 above is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits. The exhibits listed in the ExhibitIndex below are filed as part of this report.

EXHIBITINDEX

ExhibitNo.

Description

(10.1)

364-Day Credit Agreement, dated as of August22, 2018, by and among Cummins Inc., the subsidiary borrowers referred to therein, the Lenders and Agents party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.

(10.2)

Credit Agreement, dated as of August22, 2018, by and among Cummins Inc., the subsidiary borrowers referred to therein, the Lenders and Agents party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.


CUMMINS INC Exhibit
EX-10.1 2 a18-21057_1ex10d1.htm EX-10.1 Exhibit 10.1   EXECUTION VERSION     $1,…
To view the full exhibit click here

About CUMMINS INC. (NYSE:CMI)

Cummins Inc. is a manufacturer of diesel engines. The Company operates through four segments: Engine, Distribution, Components and Power Generation. Its Engine segment manufactures and markets a range of diesel and natural gas-powered engines under the Cummins brand name, as well as certain customer brand names for the heavy-and medium-duty truck, bus, recreational vehicle (RV), light-duty automotive, agricultural and governmental equipment markets. Its Distribution segment consists of various businesses, which service and/or distribute a range of its products and services, such as parts and filtration, power generation, engines and service. Its Components segment supplies products, including after treatment systems, turbochargers, filtration products and fuel systems for commercial diesel applications. The Power Generation segment provides power generation systems, components and services for a customer base, including power solutions and mobile power solutions.